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Indonesian govt to revise rules on procurement bids

11 Aug 2010

Source : The Jakarta Post

Indonesian President Susilo Bambang Yudhoyono said last week his government would revise a regulation on bidding for public procurement of goods and services, blaming it for sluggish public spending.

“Based on our evaluations, the regulation has slowed down the spending of state and regional budgets. This has bottlenecked the trickling down of economic benefits,” Yudhoyono said prior to a two-day Cabinet meeting, which was also attended by governors, heads of government agencies, state company executives and noted businessmen, at the Bogor Presidential Palace.

“The impact is clear. The economic development, particularly at the regional level, cannot be optimized as local administrations fear speeding up spending.” Yudhoyono said the revision would be discussed Friday.

Many bureaucrats at central and local levels have criticized the rigidity of the 2003 presidential regulation on procurements, under which failure to strictly comply would lead to prosecution for power abuse or corruption. Due to the revolving risks, the bureaucrats said they preferred spending more time complying with the regulation, or in some cases, refusing to initiate procurement bids.

“There have been numerous complaints about the regulation. This has led to most state and local budgets lying idle. The regulation should not be too bureaucratic,” Yudhoyono said.

Finance Minister Agus Martowardojo said only 35 percent of state budgets had been spent in the first half of this year, far lower from the expected 50 percent. Average budget spending by local administrations has remained at a similar level.

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